The writer, an FT contributing editor, is chief executive of the Royal Society of Arts and former chief economist at the Bank of England
Obscured from view by political sloganeering, an ideological war is quietly being waged on both sides of the Atlantic. This is a conflict about how best to design and execute policies to boost medium-term economic growth. Welcome to the battle of the supply-siders.
For most of the past half-century, the supply-side agenda of economic policy has been owned by the political right in the UK and US. The intellectual seeds of this revolution were sown in the early 1970s by free-market economists-cum-philosophers such as Friedrich Hayek and Milton Friedman. They were watered by the Great Inflation of the 1970s which laid bare the shortcomings of demand-oriented Keynesian policy in the face of adverse supply shocks. Indeed, the work of Friedman and others suggested that supply-side stimulus was the only sustainable, non-inflationary, recipe for medium-term growth.